Dy. Commissioner of Income Tax , Circle-3(2), Hyderabad V. Soma Infrastructure Private Limited , Hyderabad

ITA 129/Hyd/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2879 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-B
• Next Hearing Date: 07-06-2021
• Assessment Year: 2015-2016
• Appeal Filed On: 01-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER I.T.A. NO. 129/HYD/2019 ASSESSMENT YEAR: 2015-16 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-3(2), HYDERABAD VS SOMA INFRASTRUCTURE PRIVATE LIMITED, HYDERABAD [PAN: AAMCS0598Q] (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI B.BALA KRISHNA, DR FOR ASSESSEE : SHRI MOHD. AFZAL, AR DATE OF HEARING : 07-06-2021 DATE OF PRONOUNCEMENT : 18-06-2021 O R D E R PER S.S.GODARA, J.M. : THIS REVENUES APPEAL FOR AY.2015-16 ARISES FROM THE CIT(A)-3, HYDERABADS ORDER DATED 14-11-2018 PASSED IN CASE NO.0180/DCIT-3(2)/HYD/CIT(A)-3/2017-18, IN PROCEEDI NGS U/S.143(3) OF THE INCOME TAX ACT, 1961 [IN SHORT, THE ACT]. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE REVENUE HAS RAISED THE FOLLOWING SUBSTANTIVE GROUNDS IN THE INSTANT APPEAL: 1. THE LD.CIT(A) ERRED BOTH IN LAW AND ON FACTS OF THE CASE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD.CIT(A) ERRED IN APPLYING RULE 8D OF THE INCOME T AX RULES, R.W. SEC.14A OF INCOME TAX ACT ALTHOUGH THE ASSESSEE DID NOT HAVE ANY INCOME EXEMPT UNDER THE IT ACT. THE PROVISIONS OF SEC.14A APPLY ONLY IF THEE IS EXEMPT INCOME U/S.10 OF THE IT ACT WHICH IS NOT THE CASE HERE. ITA NO. 129/HYD/2019 :- 2 -: 3. THE LD.CIT(A) ERRED IN HOLDING THAT SEC 14A IS N OT APPLICABLE IN THIS CASE IGNORING THE DECISION OF APEX COURTS RULING I N THE CASE OF CIT VS. RAJENDRA PRASAD MOODY (115 ITR 519) AND THE BOARD C IRCULAR NO.5 OF 2014. 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) WAS CORRECT IN HOLDING THAT IN A BSENCE OF EARNING OF EXEMPT INCOME DURING THE PREVIOUS YEAR, NO DISALLOW ANCE OF EXPENDITURE INCURRED IS PERMISSIBLE UNDER SECTION 1 4A OF THE ACT R/W RULE 8D OF THE IT RULES, 1962? 3. AT THE OUTSET, LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT SINCE THERE IS NO DIVIDEND INCOME EARNED IN THE RELEVANT PREVIOUS YEAR, THE CIT(A)S ORDER DELETING THE IMPUGNED DISALLOWANCE MAY BE UPHELD. IN THIS CONNEC TION, HE RELIED ON THE FOLLOWING CASE LAW: I. CIT VS. CHETTINAD LOGISTICS PVT. LTD., [80 TAXMANN.COM 221] (MADRAS); II. CIT VS. CORRTECH ENERGY PVT. LTD., [223 TAXMAN 130] (GUJ); III. CHEMINVEST LTD., VS. CIT (2015) [378 ITR 33] (DEL) THEIR LORDSHIPS HOLD THAT SECTION 14A READ WITH RULE 8 D APPLIES ONLY IN RELATION TO AN ASSESSEES EXEMPT INCOM E AND NOT OTHERWISE. WE THEREFORE SUSTAIN THE CIT(A)S ORDER U NDER CHALLENGE DELETING THE IMPUGNED SECTION 14A R.W. RULE 8D DISALLOWANCE. 4. THIS REVENUES APPEAL IS DISMISSED IN ABOVE TERMS . ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH JUNE, 2021 SD/- SD/- (LAXMI PRASAD SAHU) (S.S.GO DARA) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD, DATED: 18-06-2021 TNMM ITA NO. 129/HYD/2019 :- 3 -: COPY TO : 1.THE DY.COMMISSIONER OF INCOME TAX, CIRCLE-3(2), HYDERABAD. 2.M/S.SOMA INFRASTRUCTURE PRIVATE LIMITED, 8-2-623/15/1/1, 14 AVENUE, ROAD NO.10, BANJARA HILL S, HYDERABAD. 3.CIT(APPEALS)-3, HYDERABAD. 4.PR.CIT-3, HYDERABAD. 5.D.R. ITAT, HYDERABAD. 6.GUARD FILE.